Tag: customer relations

Categories
business

O Customer, Where Art Thou?

KolejkaI really really REALLY don’t think there will be only one post about customers. Really. But I had to start somewhere, so here goes.

The way this laser hair removal place started acquiring customers was rather funny. The owner worked on the fifth floor of the same building in the similar laser hair removal place (only smaller and less clean) when suddenly the owner decided to call it a day. His customers were left out in the cold, many of them in the middle of their voucher deals or packages. The guy pretty much just packed and went home. Given that technicians (there were two) were in charge of their schedules, it was only natural that most of the customers had their personal cell phone numbers. So when the business closed they started ringing up the technicians. Instead of brushing off they decided to explain the situation and offer these customers an option to wait until this new business is up. Since all of this was happening during summer – not the best time for laser skin treatments – a lot of customers agreed to wait it out. There were some misunderstandings and a lot of angry words exchanged, but at the end of the day most of it got resolved.

Once the place was up and running the owner got on the phone again reaching out to old customers. Of course, it wasn’t overly smart to offer them to complete the treatment for which they paid someone else. However, the thinking was that a couple of sessions wouldn’t be that big of a price if the owner would be able to sell them a package of her own. It didn’t always work, but the place got their schedule up and running pretty quick and people were coming in every day.

customer_queueWe started ringing up deal sites. It was a bit unexpected (although understandable) when some of the sites refused to deal with a new business because it was new business. Other sites couldn’t care less. Groupon was the first to take us on, their only focus was pricing – they low balled us to something almost totally outrageous. We haven’t had much experience with any deal sites from the merchant perspective, so it was sort of a revelation to find out how these sites treat both merchants and customers. Words like “customer loyalty” and “quality customer base” started making a whole new world of sense.

One of the sites (I think it was LivingSocial) flat out told us to go and buy likes on Facebook (either through FB’s own ad campaign or otherwise), because they will only deal with us if we have at least 100 or so likes on Facebook. Not a big deal, but if you had your company opened a week ago a hundred likes might seem like a problem. Amazon Local demanded a certain rating on Yelp in order to run our deal. When I flat out asked “So you’re Yelp’s bitch now?” they really had nothing to say except “effectively – yes”. One of the largest deal sites on the market being subject to restrictions of another company, well known for their shady practices of falsifying a businesses’ ratings and reviews – that was just too funny.

Still we managed to get some of our deals up on Groupon, Lifebooker, KGB Deals and, eventually, Amazon and LivingSocial – some time later. That’s when the “customer quality”, “customer loyalty” (or “customer retention”) started making all kinds of different sense.

Let me get this out of the way. 90% of coupon customers aren’t worth the time you spend with them on the phone to schedule an appointment. It’s the other 10% that are the reason for doing the coupon site deals. Each category, obviously, deserves a separate post – which I will probably have to do, eventually.

Strange as it seems there actually is a difference between clients coming different coupon sites. The deep dive probably deserve a separate post altogether, but in a nutshell – we’ve seen the worst coming from Groupon and Lifebooker, the rest are marginally better. One thing where you may regret having loyal coupon customers is when they like you so much they keep buying vouchers all over the place – whatever it takes as long as they keep getting treatments at your place at coupon price. They will never convert and they keep bringing more loyal coupon users, so we decided to force “New customers only” rule on most of our deal contracts after the first wave. It may not sound nice to customers, but it’s a way to cut losses. If they like our services so much they should definitely try to negotiate a deal (and it’s always a possibility with the business like this), instead of trying to cheat your way through.

Here’s a little story to explain.

We had one customer who absolutely loved our service. At least that’s what she said during first five sessions of her coupon treatment. She went and bought four more vouchers (from the same deal site – we didn’t have any other deals running at that moment) – using friends’ credit card with option to “gift” a voucher to someone else. When we pointed out she was effectively cheating the coupon site and gaming the system and that we refuse to honor more than two vouchers out of all five she owned (a perfectly legal move based on our contract with coupon site which stated “one voucher per client plus one as a gift” – or something like that) she decided that we have the worst place ever. She complained to deal site – and they confirmed we did the right thing and warned to ban her AND her friends from the site for cheating. She demanded that we provide her with free session for this occurrence of horrible customer service. She promised she will write a negative review on Yelp – which she did, calling us liars for not honoring a single voucher. Not that we care much about Yelp (we’re not paying them to remove bad reviews, so there’s that), but we took note and responded to review, of course, explaining what exactly happened and how the customer was in the wrong. Given that you can’t really inject any brains or conscience into such customers we decided to implement “new customers only” rule. At least it saves us from drama at the office.

Categories
business

Truth About Deal Sites. Part 2 – While You’re At It

Dealing with clients who are coming from coupon sites is a whole different can of worms compared to regular clients (and a form of entertainment – if you are into that sort of thing). The mentality of a person, buying under-priced deals and expecting same or better level of everything: service, attention and respect is beyond me. If you are buying something tangible (say – a tablet or another gadget) with 80% discount, you can realize that you are buying a four-year old model that someone overstocked on awhile ago. You get what you pay for. When it comes to services this understanding goes away. People expect getting $600 worth of service for $99. Let me break a hard truth to you – if a company is providing a six-hundred-dollar service exactly the same way for a hundred dollars they are either selling an overpriced service or they are losing money.

Let’s look at it from money perspective.

Most of laser hair removal treatments come in packages of six. Let’s say you purchase six sessions on a small area for $99 on a deal site (the most common purchase so far). Looks reasonable, right? Only $16.50 per session – close to lunch money, if you’re in Manhattan. With coupon sites splitting the check around 50/50 (they get half and merchant is getting half – or close to that), the business only sees half of the money you paid. Which means they are making $8.25 per treatment.

An average laser technician is making in the vicinity of 10 – 15 dollars per hour. Some places pay a percentage off of each treatment on top of that. Some let the technician keep all their tips (instead of, say, sharing all tips across all technicians who worked that day) and allow them to sell and make a percentage off the sold treatment. But for the sake of simplicity let’s settle on $15 per hour as a close approximation to hourly rate and percentages. Surely, a small area doesn’t take an hour to do, but even the busiest places can hardly squeeze a small area into less than 10 minutes – with client getting in, prepping or applying gel, treating, signing consent form, removing gel, etc, etc. Facial treatments are even longer, because you have to be more careful with the treatment itself. So we can expect an average technician to perform about five small area treatments per hour if she worked like a factory worker at a conveyor belt. Let’s not discuss the fact that you don’t want to be treated like a piece of machinery, but rather like a human being. So an hour of one technician’s work can generate close to $40 of revenue. Out of which $15 dollars is her salary alone. Which leaves business with $25 per hour to cover the rest. There are lost appointments (when customer cancels or reschedules at the last minute and there’s no one else to put in his/her appointment slot), laser machines payments (a single good laser machine can cost up to $200,000 plus its own maintenance and insurance plans), supplies, utilities, rent, business insurance, maintenance, salary of the receptionist (if there is one) to consider as well. If you add all costs together, a business can consider itself lucky if they break even on a coupon sale. It gets worse if a deal site starts competing with another deal site and tries to bring your coupon price from $99 to $79 (for the lazy – a business is then makes $6.58 – just over a price of cup of coffee at Starbucks). It gets worse on larger areas, that’s why most of businesses stopped selling large areas on coupon sites. In other words – it’s next to impossible to make money on coupons, your best bet is not to loose money on it and hope to convert.

Given that, business owners are doing two things. First and foremost – they are trying to upsell coupon customers – obviously. A converted customer is the only way to make money on a coupon sale. Recently we noticed some coupon customers complaining on Yelp that businesses are trying to sell them other packages. How dare they! The fact that Yelp decides to publish these reviews also tells you about the overall quality of their review system. But that’s whole another story.

Second thing any reasonable business owner would do is to try and minimize his costs on coupon customers – especially those who don’t convert. Given that each customer gets six treatments, a business has about four to five chances to sell to one particular customer (it’s almost impossible to sell on first visit or two, so I am discounting for that). Some customers complain that their treatment at our place took longer than at other places. That’s because at their previous place they weren’t converting and that business owner decided not to waste technician’s time on these clients. They still got their treatment, but without the regular zeal and a lot faster – as their own words confirm.

Speaking of mentality of coupon buyers even coupon agents themselves note that customer loyalty on coupon sites doesn’t exist. The whole coupon industry have groomed a special kind of customers who shop based on price alone. In my many negotiations with deal sites one of the reasons cited to me was literally “if we make our coupon one dollar more than competition – no one will buy, they will go with the lowest price”. It’s not necessarily the absolute truth, as we found out in our running, but it is the general case.

Another edge of this, apparently, multiple-edged knife, is the next level of deal-searcher. They like a place, but really don’t want to spend money. They load up on coupons purchased through multiple credit cards so that coupon site cannot track and enforce their “one voucher per customer” rule and show up at the door with stack of vouchers (the most we have seen so far was six vouchers for one client – all purchased through multiple accounts with slightly different name) and demand the service because they “have a voucher you must honor”. If for some reason a business owner isn’t around to intervene – they have a chance to succeed in getting their treatment, because a technician or receptionist don’t have any say in these matters. The proper course of action, of course, is to call the coupon site’s customer service and let them deal with a cheater. From my experience most of deal sites do their best to protect merchants in such cases, but it requires some effort.

To add injury to insult – the coupon clientele is the most vocal when it comes to complaints. If you cannot accommodate their appointment this week they will call the voucher company and tell them they can’t get in touch for weeks (this is mostly entertaining when they have purchased their voucher a day ago) with you or you’re booked for three months or some such nonsense. Surprisingly, people who are purchasing direct (even if with a discount) are usually very respectful and a lot easier to work with. Guess they understand the concept “you get what you paid for” much better.

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    Categories
    business clients

    Understanding The Web Designer – 10 Critical Questions You Should NOT Be Asking

    There is an interesting article on Small Business Branding blog – “10 Critical Questions To Ask A Web Designer”. The post is wrong on so many accounts, it’s would have been easier to ignore it altogether. However, being a lead to a Zealus web design studio for so many years I can’t help but notice how irrelevant most of these questions are – and here’s why:

    1. What skills do you or your team posses? HTML, CSS, Drupal, WordPress, MySQL, PHP, CGI, Ruby on Rails? – author argues that by listening to the white noise the project lead makes while trying to answer your question you will be able to pick something useful. Wrong – you won’t. If he’s technically savvy he (or she, doesn’t matter) will sink you in the sea of gibberish technology talk, and if he’s not – he will sink you even deeper in semi-technology blabber. Point is – you will leave thinking that you have talked to a smart guy while in reality you have learned nothing.
    What you should be asking – what’s the technology called, how widespread is it, how mature is it. These are the things you can understand, remember and cross-check after the conversation. What’s important – you will be able to make a business decision based on things you can comprehend.

    2. How quickly can you provide a first draft of the site and how long does a job like this normally take? – author argues that such preliminary estimates can help you manage your schedule. Wrong – before signing the contract all dates are so grossly underestimated that you really have to live outside of the reality to base anything but future negotiations on those dates.
    What you should be asking – how long projects like these take typically? What are the pitfalls, what could drag the project, how to prevent dragging from happening.

    3. What is your working procedure and how will you communicate your progress? – if you are working with freelancers they most likely have no procedure in place and if you have with some established group they will tell you about project status reports even before you have to ask. The reason being that people who’s been around long enough know that if they fail to communicate properly they fail to get paid. So they will make damn sure their client knows all the hard work they put in, they will create a dashboard with tasks, timelines, heck, you might even see Gantt chart!
    What you should be asking – what is the phone number of the person responsible for the project. One single person has to be responsible, if there is more than one – walk away.

    4. How much support comes with this package deal? – obvious statement that no one works for free is obvious. Make sure you ask this question before negotiations begin, otherwise you can negotiate that sweet low price only to find out that support costs painfully extra. Unless you’re dealing with “Cheap web sites for r$499 per 5 pages” type of designers – there is no point in asking this question aside from the other negotiations.

    5. What kind of after support do you offer? – same thing. Best thing to do is negotiate a support contract for some period immediately after launch so you will be covered in case something comes out immediately after your web project is live. In addition to that you might want to get a per-incident support after initial support contract is expired.
    What to ask – nothing, keep negotiating.

    6. What is your normal procedure if the job does not turn out satisfactorily? – author is then ventures on a journey of how everyone is spoiled by generous refund policies. Well, you just go and try to get a refund from anyone, I just want to watch how easy it would be. Speaking of service contracts, I may not live long enough to see the end of it anyway.
    What you should be asking – nothing, just get a copy of the contract BEFORE you sign in and show it to your lawyer. It just another one of those things you want to negotiate as hard as you can. We have actually dropped a number of contracts because we could not successfully negotiate this single point. Everything else was set, but because client wanted a full refund or had some other crazy idea about how he gets all of his money back at the end when he tells us he doesn’t like it – it was dropped. It’s cheaper than a lawsuit anyway.

    7. What software or technology will you be using to build my site and will I be able to use and update it myself? – the tragic story of a person who was asking for white noise in question #1 and ended up with useless application without anyone around to support it. That’s the illustration right there why pretty much everything that post is telling you is wrong.
    What you should be asking – see question number 1: how widespread this technology, how mature is it. Is is Open Source or is it proprietary (former is better than the latter, unless you’re talking about Flash which is a whole another can of worms altogether).

    8. Does it cost extra for this software or does anything you recommend to build this site going to require additional license purchased? – this is the only sane question in the whole ten, however, the justification is flawed nonetheless. As with any contractor, he brings his own tools. If your project lead is a geek he will force you into buying the top-notch hardware and software so that he could play with new shiny toys that he otherwise could not afford. If your project lead is a sales agent she will sell you whatever she will make the most of. Either case – you loose.
    What you should be asking – is for a detailed chart of costs, including anything and everything your project needs to be completed successfully. Let your future contractors know that you have such and such assets and if anything needs to be purchased – it has to be put on that chart. Time, licenses, hardware, image and sound rights and royalties – everything goes there. This way you can cross-check with other contractors and actual vendors to see who’s charging you and for what. It’s your money, don’t waste it.

    9. We would like the domain name administrator to be in our representative’s name and email. Can you arrange that? – unless you trust your contractor sleep in the bed with your husband (or wife) – never ever even mention this to them. Spend as much time as it requires, but BUY THE DOMAIN YOURSELF! Do not give access to your domain to anyone else, if there are any modifications – learn how to do them yourself or register a domain with registrar who has telephone support – like GoDaddy. You can rebuild the site in months, but rebuilding a reputable brand name, replacing domain that all your customers know can take years.
    What should I ask – can you develop on test platform and them move the site to our domain? But any decent developer should do that anyway.

    10. Can I see a portfolio of previous sites built. Or is there a demo of a site similar to what you will be building us? – this should be first question that you ask a contractor (designer, programmer or whatnot). Why is it #10 – I have no idea, I guess just to reiterate how much wrong is with initial post. In addition to portfolio (if there is any) you should briefly explain what you are trying to do and how does the designer see it solved. That should be the first thing – before you put anything else on the table.